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Evaluate the projects using risk-adjusted discount rates

Problem: Erica's Farm is faced with two mutually exclusive projects. The following is data on the two projects.

Project C K
Initial Investment $40,000 $50,000
Project Life 3 years 3 years
Annual Cash flow 15,000 25,000
Risk adjusted discount rate 10% 14%
Risk free rate of return 6% 6%

Evaluate the projects using risk-adjusted discount rates. What is the NPV for each project?

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Finance Basics: Evaluate the projects using risk-adjusted discount rates

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